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Trying to Add Portability to Movie Files

It is easy to take a DVD to a friend’s house and watch it on his TV. But things are more complicated when digital video downloads are involved. A movie file bought from Blockbuster.com will not work on a Sony HDTV, for example, and videos from iTunes work only on devices with Apple software.

At the Consumer Electronics Show, a big high-tech gathering that will begin Wednesday in Las Vegas, Hollywood studios and consumer electronics makers plan to lay out some steps they are taking to simplify this digital future — and perhaps stem the worrying decline in home entertainment sales.

Hollywood and its high-tech partners are deeply concerned that their customers will rebel against some of the limitations taking shape as video moves away from physical discs.

Consumers, the industry believes, could balk at buying digital movies and TV shows until they can bring their collections with them wherever they go — by and large the same freedom people have with DVDs.

In the last year and a half, a broad alliance of high-tech companies and Hollywood studios has been trying to address this problem through an organization called the Digital Entertainment Content Ecosystem, or DECE. Five of the six major Hollywood studios (Warner Brothers, NBC Universal, Sony, Paramount and Fox, but not Walt Disney) are involved, with Microsoft, Cisco Systems, Comcast, Intel and Best Buy.

The group is setting out to create a common digital standard that would let consumers buy or rent a digital video once and then play it on any device. It might sound technical, but it could be crucial to persuading consumers to buy all the splashy new Internet-connected gear that tech companies will demonstrate at C.E.S., like HDTVs and set-top boxes that can download TV shows and films.

Under the proposed system, proof of digital purchases would be stored online in a so-called rights locker, and consumers would be permitted to play the movies they bought or rented on any DECE-compatible device.

So, for example, business travelers might find that their hotel room television could tap into their personal movie collections. Consumers could buy Blu-ray discs and have digital copies of those films accessible from all of their devices, even their mobile phones. And a PC maker could customize a new laptop for buyers by loading it with all their movies and shows — and eventually even their video games and e-books.

These advances may not be all that far off. On Monday, the digital content organization plans to announce several moves that signal it is ready for companies to start building devices and services with the technology this year. Industry observers expected such an announcement last year.

The group is announcing that it has adopted a new file format that, like the DVD, will allow any company to create a compatible device or digital video store. It is also selecting Neustar, a company based in Sterling, Va., to create the online hub that will store records of people’s digital purchases, with their permission.

The group is also announcing 21 new members, pushing the effort even further toward cross-industry unity. The new companies include consumer device makers like Samsung Electronics, Nokia and Motorola, entertainment retailers like Netflix and the European chain Tesco, and the cable companies Cox Communications and Liberty Global.

Disney is still a holdout. It is advocating a similar plan called KeyChest, which analysts say it may introduce working with Apple. A Disney spokesman said the company would give an early look at its rival technology at C.E.S.

Photo

Mitch Singer of Sony Pictures Entertainment is president of a group trying to make digital movies easier to buy and use.Credit
Justin Sullivan/Getty Images

The DECE says that it is further along and that the technical specifications of its system will be available to other companies in the next few months. Devices and services could be available to consumers as soon as early next year.

“There were many skeptics out there who believed that with so many companies, we could never achieve anything,” said Mitch Singer, the president of the DECE and chief technology officer of Sony Pictures Entertainment. “We’ve actually achieved almost everything.”

But the effort still has a long way to go before it can claim anything like success. The proof will be whether it revives home entertainment sales by getting consumers excited about the new freedoms of the digital world.

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Hollywood needs consumers to buy more digital content. DVD and Blu-ray revenues contribute significantly to Hollywood’s bottom line, but spending on those discs is dropping sharply. It declined 3.2 percent to $4 billion in the third quarter of last year. Digital sales were up nearly 20 percent in the quarter, but amounted to a relatively paltry $420 million.

And movie studios can only guess how much revenue is lost to piracy, which they say tends to grow as the speed of Internet access increases.

Hollywood also wants to avoid having a single company like Apple enticing people to buy only from its own closed digital system, and ending up with an inordinate degree of control over matters like pricing. Movie executives shudder at the power Apple accumulated over the music labels with iTunes and the influence Amazon appears to be gathering over publishers with e-books.

“The possibility is there for a single player to completely dominate the economics,” said Bill Rosenblatt, president of GiantSteps Media Technology Strategies, a consulting firm.

Hollywood “runs the risk of being held up and surpassed by powerful entities going it alone,” he said, adding that Amazon showed signs of doing just that with its introduction last month of Disc+ On Demand. That service lets consumers who buy certain DVDs and Blu-ray discs view the same titles on demand at no additional cost.

There is also the possibility that the DECE is making a flawed bet on the direction of technology and emerging consumer habits. Its system is primarily aimed at getting people to buy and own digital copies of films, in the same way people collected VHS cassettes and DVDs.

But an increasing number of Web services allow people to more cheaply stream movies and shows without ever permanently storing a copy. The DECE says its technology can accommodate streaming — allowing members of a family, for example, to watch the same movie at the same time in different locations. But it is not clear that such a rights scheme is necessary in a purely on-demand, watch-it-once world.

“The market desperately needs this, but in some senses it is already moving past it toward rental of content over ownership,” said Danielle Levitas, an analyst at IDC. Ms. Levitas also said DECE’s progress had been slower than she expected: “I wanted to see devices in the market already announced by C.E.S.”

Mr. Singer acknowledges that “every single company knows that time is not their friend right now.” But he says that to truly spark the digital media revolution, the industry must embed its technology so deeply into digital services and devices that customers will not even notice it — so that getting access to their digital content is as easy as bringing a DVD to a friend’s house.

“Consumers shouldn’t have to know what’s inside,” he said. “They should just know it will play.”

A version of this article appears in print on January 4, 2010, on Page B1 of the New York edition with the headline: Trying to Add Portability To Movie Files. Order Reprints|Today's Paper|Subscribe